You’ve delivered your services or product(s) right on time, and your client was exhilarated with it, but there’s a twist. The invoice you’ve sent are several days late, and this isn’t the first time that this has happened. Your might not have considered using Outsourced Accounting Bookkeeping Services to get your clients to pay on time.
Irrespective of the business you are in, you will experience late-paying clients. As a matter of fact, almost 80% of businesses receive their payments well past the due dates. Approximately 75% of businesses have had clients who have not paid their invoices for at least 40 days.
Looking at the circumstances, customers get the benefit of the doubt. Most clients are amicable and are looking on paying you eventually. Their late payments hurt your income and ruffle-up your budgets. That’s not good for your business’ financial health. It’s wise to nip the problem in the bud and take action to preclude new clients to become late payers.
Where should you start? To help remind your customers to pay on time, we suggest using one of the following tactics:
1. Maintain Superb Client Relationships
Your client will want to pay you on time when you make them feel special and not a revenue machine. Always maintain a friendly relationship with your customers and let them know they’re special. There are many things to make them feel they’re not only a client, but a valued member of your team. Help solve a personal problem, feature them in your blogs, or provide a one-time service bonus.
People always want to feel special, and our brains fire up when we’re mentioned by our names. Clients are more than willing to go out of their way if you do the same for them first, and you’ve just learnt the Principle of Reciprocity.
As a business, you need to always remember that the clients may have hundreds or even thousands of employees. Make a list of key contacts and send them a personalized gift or a thank you note. A simple hand-written or printed note telling them they’re important will go a long way when the time arrives for them to pay your invoices.
2. Having Precise Payment Terms
Sometimes, clients assume wrong about your payment terms. They assume you function on a “Net 21,” “Net 30,” or even on a “Net 21” basis or on specific days, like the 1st and 15th of a month. All your terms and conditions should be worded-out clearly. There should not be any gray area.
Add relevant sections in your contracts that explain the due dates, payment modes, and other required terms in detail. While working on this, check if your customers require specifically formatted invoices or how you should submit your invoices to be in compliance with their system.
Learn how having Outsourced Accounting Bookkeeping Services helps you reduce time on submitting your invoices and doing follow-up with your clients.
3. Automating Your Invoicing Process
There are times when you are busy in your project and you simply forget to send the invoices to your clients. Sending invoices through mail takes long, risks getting lost, and adds to billing expenses. Automating the process using invoicing software and accounting software gives the clients the invoice quickly. It also saves on mail expenses, paper, and keeps your invoice at the top of client’s mind.
You should schedule email reminders for payments so you are not chasing late-paying clients. Outsourced Accounting Bookkeeping Services is an invaluable option for staying on top of your Accounts Payables and Accounts Receivables. Automated solutions have payment reminders and can be linked to online payment clearance providers. It is advisable to invest in a system that automatically sends the invoices once you complete your projects.
4. Implement a Recurring Payment System
If you are working long-term with your clients, you should seriously consider a Recurring Payment System. This allows you and the client to focus more on the project and not be bothered by billing schedules and invoice due dates. It’s easy to get this up and going when you provide the same services every month.
With varying payment dues and dates, you are more likely to run into difficulties. Your client shouldn’t mind payments going out automatically for expenses without reviewing them. If they want to know, sit down and set a basic amount for all recurring invoices. If you have additional costs, show it to the clients before you bill them.
Making sure your automated invoicing solution sends invoices and receives money from clients is always a plus. You should make sure that this automated solution allows for recurring payments, allowing you and your client to focus on work. You will save time in preparing and sending invoices and your client will save time paying them.
5. Client Rewards and Recognition
How many times have you sent a “Thank You” note or a gift to your client; not to pay invoices, but to let them know that they are appreciated? A few times over the years, never? Doing this is not bribing them to pay early; you are just making them feel appreciated. Writing a handwritten “Thank You,” “Thank You for your business,” or even a “You’re a great client,” will go a long way other than clearing your pending invoices or them being paid quickly
You are giving your clients a cause to pay attention and provide a discount for prompt or early payments. This small incentive encourages your clients to clear your dues, but penalizing them for late payments is also warranted. You have to put a percentage rate for missing deadlines, but you must put the emphasis on prompt payments. You can offer a discount of 2% or even 5% for early payments.
6. Direct Invoice Payment Links
Clients might be willing to pay you immediately, but they have to open another program, log-in, and then pay you. They might be called away from their system and the session would time out before they got back. The clients don’t like repeating these steps again and again. They’ll leave it for later and eventually forget or it will be delayed.
Investing in an invoicing system supporting integrated payments like payment processor buttons reduced the time for payment processing. Your customers are a click away from paying you for your job. This reduces any distractions that might stop them from the payment task in front of them. The easier the payment process, the quicker you get paid.
In an ideal world, invoices are paid as soon as they are presented. In the real world, you need a helping hand for keeping your cash flow flowing. Using Outsourced Accounting Bookkeeping Services helps you process invoices, present it to clients, follow-up, and receive payments will reduce your financial stress.
7. Ask for An Upfront Payment and then Smaller Payments
An excellent way for lowering risk and making clients pay on time is by splitting the payments into smaller portions. You should do this will all clients. If you have clients who are already paying you, then implement this from their next project. It should be your golden standard for invoicing. You should split payments in parts like 30/30/20/20, 25/25/25/25, 20/20/30/30, 35/25/20/20 or any combination that you are comfortable with.
An agreed upon pre-payment amount before starting work on the project, the next amount after finishing the first draft. This ensures that you have received an amount before you reach feedbacks and changes to the project, or the half-way point. Now, after you have successfully implemented all the feedback, changes, critiques and the client is satisfied, ask for the pending amount.
It is better to ask for an upfront deposit when working on large projects or huge orders from the client. You should offer moderate payment options instead of one big lump sum. This ensures that you have cash flowing till the completion of the project and clients would easily be able to make those payments.
Nevertheless, when working on large projects, it is best to ask for a deposit to cover expenses.
BONUS TIPS to get paid quickly
8. Delivering Services on Time
It is not enough to look to your customer for late payments when you have not delivered your services on time. You should introspect and see if you fulfilled your customers order on time. If you’re a business and you complete the project late you can’t send then invoice. You have to account for that when you prepare your invoice.
Make sure you have enough manpower to be able to complete the project on time. Your customers will be happy and pay you quicker when you send your invoices to them for clearing. The quicker you complete your projects the quicker you get paid. There is no point in being frustrated when you deliver late on your projects, but expect the client to pay your invoices on time.
9. Quick Invoicing
Send the invoice to your customer as soon as the work has been completed. This results in the work and payment being linked together. You will find that by linking these two together, you will receive your payments quicker.
When your project work has been completed, there is no reason to delay the invoicing part. Using Outsourced Accounting Bookkeeping Services help you to reduce the delay in billing your client and providing them with invoices at the earliest.
10. Use Outsourced Accounting Bookkeeping Services
There is no denying the fact that there is always the need for outsourcing services in every field. With a dedicated Outsourced Accounting Bookkeeping Services team you can concentrate on providing your client with the best service possible. The team would be an extension of your business and would ensure prompt billing and follow-up to clear pending dues and payments.
Relying on the outsourced team also ensures that you are not wavering from your task at hand and are fully immersed in the project. All billing and invoicing-related tasks would be handled by the outsourced team and you receive payments on time. You have to update the team of the client contracts, billing schedules, reminders to be set, and follow-up criteria’s once and it would be done as a routine job.
It would be wise to invest in an outsourced team to reduce costs on mailing, printing, paper, and manpower-hours invested to bill and invoice the client. All processes relative to financial services would be handled in the backdrop without you being worried about the cash flow.
11. Ensure you have a Collection Policy
In most cases you get paid either on time or late. There are cases when you would be paid very late, but are paid nonetheless. There are situations where even after frequent late fees and reminders your clients don’t honor their invoices.
In these types of cases, you can ask your attorney to send a letter or make use of debt collections agencies. Be careful though, you are not trying to damage your relationship with the client. It may be that the client just forgot or the intern/secretary was inattentive in process your invoice.
For these tips to work there needs to be open communication between you and your client. While you can’t guarantee that these will work, you should prevent late payments. These tips will work with most clients and give you peace of mind.
Irrespective of how you minimize the problem, you should make sure your clients know your terms and conditions, billing and invoicing details, and other agreements. Conveying clearly with no misinterpretations gives you the advantage when you follow-up with clients for late payments and late fees.
Whatever steps you take, always have a clear-cut collections policy. This helps you to resolve unfavorable situations if they occur at all. Many customers are cooperative and pay their bills on time or late.
Never, ever undervalue the ability of preserving a harmonious and professional relation with your customers. Regardless of the frustration, always keep your cool, and be respectful when reviewing and reminding about invoices that have been pending for long.